County's richest couple battle over a fortune

Divorces often involve conflicting testimony — he said, she said. The breakup of San Diego County’s wealthiest couple is also a case of she spent, he spent.

Her Mercedes Maybach: $341,192. His Enzo Ferrari: more than $1.3 million.

Her main residence: bought for $4,097,693. His main residence: bought for $7 million.

Her gambling: Up to $30,000 a month, dropped in casinos. His gambling: Millions, spent in court.

Numbers from the Brandes divorce case

6,908: Days Charles and Linda Brandes were married

2,018: Days since the divorce was granted

$500,000: Her monthly spousal support

$16,000,000: His monthly income

6: Homes, hers

1: Home, his

$2,818,495: 2010 appraised value of her main residence

$35,545,266: 2010 appraised value of his main residence

210: Pairs of shoes in her closet

$4,457,150: Value of his fleet of 10 Ferraris

$82,545: What she spent on gifts in December 2007

$1,000,000: What he reportedly paid Christina Aguilera to perform at his 2010 Halloween party

269: His ranking on Forbes’ 2010 list of richest Americans

655: His ranking on Forbes’ 2010 list of richest people on earth

Sources: Court documents; Forbes

Since Charles Brandes filed for divorce from Linda Brandes in July 2004, the couple have been playing for high stakes. On July 15, 2005 — one month and one day before their 19th anniversary — the couple was divorced. But the battle over the money still rages.

While Linda has received roughly $65 million to $70 million in assets from Charles, her lawyers insist that’s not enough.

“There’s $140 million at issue,” said Stephen Wagner, one of Linda’s lawyers.

After all, Charles Brandes is worth an estimated $1.5 billion. He’s the richest person in the county.

While the case has not been covered in the media, it is being watched by high society and the legal profession.

“In the grand scheme of divorces, it’s way up there,” said Myra Fleischer, a prominent divorce lawyer based in Del Mar. “In the top echelon, that’s for sure.”

Charles Brandes. — U-T file photo Linda Brandes. — U-T file photo

The latest twist in Brandes v. Brandes is scheduled to come to trial in March. To date, lawyers have filled at least 14 volumes with declarations, memoranda and attachments. Thrusts and parries in this legal duel, these documents also paint a vivid portrait of life among the super-rich. Both parties claim Rancho Santa Fe as home, but in fact they inhabit a world of rare privilege.

Exhibit A: In 2005, Linda began a “major landscape renovation” at one of her homes — $1,365,130, “not including tile work.”

Exhibit B: When Charles re-married in April 2006, the nuptials included live music. From Elton John. For a reported $1 million to $1.5 million.

Divorce is common on all levels of society, but the wealthy, some say, are different that the rest of us. In financial terms, the only recent San Diego cases that compare to this may be the splits of hotel mogul Doug Manchester and Elizabeth Manchester, and Padres’ part-owners John and Rebecca Moores.

Brandes v. Brandes, though, turns on two questions that resonate with everyone, no matter how rich or poor.

What’s fair? And how much is enough?

Courtship: 1983-86

When Charles Brandes and Linda King Formo met, both were San Diego transplants and divorced parents. Beyond those surface similarities, they were living different lives.

A Utah native, she was working for the San Diego Public Library, earning about $6 an hour.

A Pennsylvanian by birth, he was his own boss. In 1974, he had founded the firm that would eventually become Brandes Investment Partners, at its peak managing more than $100 billion in assets.

They dated three years and, even in dry court papers, this sounds like a true romance. She nicknamed him “Herk.” He proposed several times until she finally accepted.

On Aug. 16, 1986, when they recited wedding vows in the courtyard of the U.S. Grant Hotel, she was a 39-year-old San Diego State undergraduate, majoring in industrial arts; he, a 43-year-old money manager with a bright, but as-yet unrealized, future. His income that year — $181,000 — was impressive but nowhere near the ranks of the ultra-wealthy.

What catapulted this couple into the economic stratosphere?

Where the money came from

Charles Brandes is the founder of Brandes Investment Partners, a Carmel Valley-based firm that employs more than 500 and oversees portfolios for large institutions.

Like fellow billionaire Warren Buffett, Brandes is a disciple of the late economist Benjamin Graham. A proponent of “value investing,” Graham focused on a business’ verifiable financial condition rather than its day-to-day share prices. Value investors often “buy and hold,” retaining shares for long-term profit rather than short-term gain.

He said: soaring equity markets and the “value” theory of his mentor, Benjamin Graham. Managing pension funds and other institutional investors, Charles invested in companies that were trading below their intrinsic worth.

She said: she did.

“If there was no Linda Brandes,” her lawyers would maintain years later, “Herk would still be in his small office, with his small group of professional clients, and there would be no BIP.”

In Linda’s version, she had insisted he upgrade his wardrobe, hire a speech coach, have his nose “fixed” and work longer hours. He had to “get serious and ambitious to create a future for them as partners,” Linda’s lawyers maintained, “if they were to be married.”

He got serious and they got married — without a prenuptial agreement. While Charles sent one to Linda, it was never signed. Decades later, he would argue that a premarital statement should be accepted in place of a written pre-nup.

“I will have no claim or interest in your business,” she said.

Or so he said.

Marriage: 1986-2004

While both Brandeses, and their attorneys, declined to be interviewed for this story, the couple’s rise to riches can be charted in their court documents.

By 1994, Charles and Linda were wealthy enough to commission a custom home in Rancho Santa Fe. The couple paid the price, almost $4.1 million, in cash.

Over the next eight years, they bought five more homes and started building two more. The grand total for these properties soared above $40 million, but the couple bought them outright.

“There is no debt against any of these properties,” Linda testified, “and all expenses regarding the acquisition and construction and/or remodeling of these properties have been paid in full.”

Theirs was a lavish lifestyle, fueled by what Linda called “phenomenal financial success.” Charles’ wealth rose and fell with the stock market, but even bad years resulted in eight-figure incomes.

Some of this money went to charity. In 1999, Charles and Linda started the Brandes Family Foundation, a nonprofit that wrote six-figure checks to the Lux Art Institute; the Helen Woodward Animal Center; and the Salk Institute.

But the couple, who never had children together, also spent freely on themselves and each other.

He bought expensive cars — in 2008, his garage held 10 Ferraris — and on his Borrego Springs estate built what Linda called “an extremely long driveway” to race sports cars, dirt bikes and ATVs.

She bought art, everything from a Warhol painting to a Chihuly glass cylinder to a Henry Moore brass sculpture. As a girl visiting her father’s jewelry store, Linda had developed a taste for the finer things — “all these gorgeous diamonds and pearls,” she remembers. As a woman, she enjoyed first-class travel, checking into five-star hotel suites from London to Cape Town. In Manhattan, where the couple owned a five-bedroom, seven-bath, two-story penthouse overlooking Central Park, they rarely ate. Instead, they dined at Le Cirque and Gramercy Tavern. In San Diego, there were dinners at Mille Fleurs and Top of the Cove.

This fairy tale existence ended in 2004, when she accused her prince of keeping another lady in waiting. Charles charged that Linda had lost all interest in him.

Whatever pain the couple suffered, the legal documents that launched Brandes v. Brandes have an antiseptic tone. Only a few passages hint at their wounds.

This one, say: “I seem to be living in a soap opera,” Linda wrote, “and I don’t like it.”

Separate lives: 2004-present

While the divorce was granted in less than a year, the financial haggling continues. When it comes to money, when is enough enough?

“We know the answer to that one: never,” said Nicholas Christenfeld, a UCSD psychology professor who has researched money and happiness.

Studies, he noted, show that people who rise to wealth soon regard their mansions and Lamborghinis as “normal.” Millionaires may fight to retain every scrap of this lifestyle, even at great financial and emotional cost.

In court, Linda suffered a clear economic disadvantage, given that her average monthly income was at least $16 million less than his.In March 2005, Charles tried to create a more level playing field, perhaps to head off a larger settlement. He kept a 30-acre Rancho Santa Fe estate with 54,000-square-feet of living space. Then he agreed to give Linda their original Rancho home; a house on the beach in Del Mar; the penthouse above New York’s Central Park, plus two other Manhattan condos; and two condos in Salt Lake City. They divided the Brandes Family Foundation, creating two charities. Finally, Linda received $18.7 million from their joint savings accounts and investments.

Interest on these instruments brought her income to about $154,881 a month.

More than enough, he said. “Linda’s legitimate expenses for purposes of temporary spousal support are no more than $36,400 per month,” Charles’ lawyers argued in August 2005, “and the income Linda can earn on the funds she already received far exceeds that amount.”

Not nearly enough, she said. To buttress her claims for more spousal support, she has tallied her personal expenses. In 2007, these included $70,829.79 for clothing; $61,759.58 for artwork; and $154,880 for gambling.

The court eventually ordered Charles to pay $2 million in Linda’s legal fees, and her spousal support gradually climbed to $500,000 a month.

During a hearing in November, her lawyers also took aim at $140 million of Charles’ “S Corp distributions,” money passed to shareholders of corporations formed under a sub-chapter S of the Internal Revenue Code.

That issue will be on the docket when Brandes v. Brandes resumes March 14.

Unraveling this union is tricky, but must it be this complicated? During a hearing in November, Superior Court Judge Jeffrey Bostwick objected to both sides’ quarreling over his “statement of decision.” This ruling rejected, among other things, Charles’ claim of a binding oral prenuptial agreement.

“Each one of you wants to parse each word in the statement of decision to mean what you want it to mean,” he told the rival lawyers.

“Divorces are as big as you can afford them to be,” said Janet Bowermaster, who teaches family law at California Western School of Law. “The more money you have, the longer it takes and the more it costs.”